In the Matter of the Complaint Against

 TIGRON DISTRIBUTORS
 at 906 Summit Avenue
 Jersey City 7, New Jersey

 P.O.D. Docket No. 1/153

 06/19/59

 Ablard, Charles D.  

 APPEARANCES:
 Bass and Friend,
 342 Madison Avenue,
 New York, New York for the Respondent 

 Robert M. Ague, Jr., Esq.;
 for the Complainant

An interim impounding order was issued by the undersigned on May 27, 1959, pursuant to 39 U.S.C. 255, the fictitious fraud statute. The Respondent has furnished an affidavit of identification and has complied with the provisions of that statute. On June 15, 1959, the General Counsel relying on the implicit and inherent authority of the Postmaster General under 39 U.S.C. 259 and 732, the administrative fraud statutes, moved for an extension of the interim order until the conclusion of the administrative proceedings. Oral arguments on the motion were presented by the parties before me on June 18, 1959.

The two earliest decisions on this question appear to be Donnell v. Wyman, 156 Fed. 415 (D. Missouri, 1907) and Meyers v. Cheesman, 174 Fed. 783 (C.A. 6, 1909). The Donnell case held that the Department could not issue an interim order but the decision seems somewhat clouded by the fact that the court disapproved of the fact that an interim order had been in effect six weeks without a final agency determination. Thus, the case is distinguishable from a proceeding such as this in which the Department proceeds expeditiously. In Meyers, the Court of Appeals refused to pass on the question inasmuch as it had been rendered moot after the lower court decision. Thus, it is inapplicable.

In 1956 a bill granting authority for interim impounding in obscenity cases, H.R. 9842, was passed by the 84th Congress. (39 U.S.C. 259b) The bill as introduced and passed applied only to obscenity proceedings under 259(a). Prior to the enactment of this statute the Department in the 82nd Congress had supported passage of H.R. 5850 which would have granted interim authority in both fraud and obscenity proceedings. The bill passed the House of Representatives but not the Senate. In the 83rd Congress, H.R. 569, a bill similar to H.R. 5850 of the prior Congress, was introduced but did not pass either house.

The first of four recent decisions upholding the authority for interim impounding, all of which were rendered prior to the enactment of H.R. 9842 in 1956, was Wallace v. Fanning, Civ. No. 15499-T (S.D., Calif., 6/29/53).

The court said:

"The Postmaster General had a reasonable time, while instituting administrative proceedings and holding a hearing on the evidence, to impound the mail addressed to W.A. Lee."

The court cited 39 U.S.C. 255 and 259(a) as the basis for this authority.

The next decision was Williams v. Petty, 136 F.Supp. 283 (E.D., Oklahoma, 1953). That decision also relied upon 255 and 259(a). However, the court seemed to rely more on the implicit authority of 259(a) than the express authority granted in the fictitious fraud statute. Citing Wallace the court said:

"While it is true that the Act of Congress in question does not specifically say the Postmaster General may, pending a hearing on the proposed fraud order, instruct the local Postmaster to impound the mail, it is my judgment that the authority to impound mail pending a hearing is implicit in the authority of the Postmaster General to direct that the mail be returned to the original sender after a fraud order is issued.

Congress has placed the responsibility for protecting the mails upon the Postmaster General. It would certainly greatly hinder and handicap him in the administration of his duties in that regard to hold that he cannot, pending a hearing on whether or not a fraud order should issue, direct the local Postmaster to withhold mail which is the subject matter of the investigation."

The next decision was Barel v. Fiske, 136 F.Supp. 751, (S.D., N.Y., 1954), a fraud proceeding in which an interim order was issued pursuant to 39 U.S.C. 255. The criminal fraud statute, 18 U.S.C. 1341, was also cited as authority. Judge Sugarman found that the Respondent had "failed to appear and be identified" as required by the statute and that until compliance with the statutory requirement had been met the Postmaster General was justified in withholding the mail. The court went on to say that:

". . . assuming arguendo that plaintiff had sufficiently identified himself with Gem Company as he claims, the Postmaster General has the authority to impound suspect mail matter pending decision of the question whether the mails are being used unlawfully. Of course, this refusal to deliver a person's mail must be based upon substantial evidence to sustain a preliminary finding that there is a fraudulent scheme operating through the postal facilities."

The court cited Williams v. Petty, supra.

The last decision was Stanard v. Olesen, 121 F.Supp. 607 (S.D., Calif., 1954). An interim order had been issued pursuant to 255 and 259(a). Judge Westover in reviewing this order cited Wallace and stated:

"There has been no exhaustion of administrative remedies, and it would appear to this court that the Postmaster General should, in following administrative procedure as outlined by Congress, have a reasonable time after the proceedings have been initiated to determine whether there has been a violation."

The matter was taken to the Court of Appeals for the Ninth Circuit where a motion for relief from the interim order pending review was made. The Court of Appeals heard argument and then ordered the motion held in abeyance until June 15, 1954, to permit the Post Office Department to make a final order. Application was then made to Mr. Justice Douglas, sitting in his capacity as a Circuit Justice, to have the interim impounding order restrained. Although Mr. Justice Douglas's opinion ^1/ indicated that he had serious doubts as to the authority to impound, he refused to stay the order. He said:

"The interim order should be lifted only if it is invalid. If it is lifted, the issue of its validity will become moot, see Meyers v. Cheesman, 174 Fed 783, supra. The case is now pending in the Court of Appeals and will be decided by that court in due course. The Department of Justice advises me that a final administrative order will be made very shortly, probably in two or three weeks. If that order should be favorable to petitioner, she would of course, receive all her mail and the case would become moot. If the order is adverse to her, its validity can be reviewed by the Court of Appeals. I was assured on oral argument that any mail intercepted under the interim order would be impounded and kept separate from the other mail that is subject to the final administrative order, until judicial review is had, so that the separate issue of the validity of the interim order will be open on review. There is thus no danger that the issue presented by this application will become moot, if the decision of the Post Office goes against petitioner."

His expression of doubt as to the authority was dicta. This was an opinion of an interlocutory matter by a single Supreme Court Justice not binding as precedent on either the Supreme Court or any lower court.

Upon a determination on the merits by the Post Office Department a final order was issued against the Respondent. The matter was then taken back to the District Court where Judge Pierson Hall, disagreeing with his Brother Westover, held that the departmental decision on the merits was erroneous and enjoined the enforcement of the order. He also discussed the interim order saying:

"The Order of the Postmaster General of March 1st, 1954, was made without notice or hearing of any kind whatsoever. ^2/ It directed the defendant Postmaster to refuse to deliver plaintiff's mail to her and to impound it. It was made under the purported authority of 39 U.S.C. 259(a). No statutory authority exists for it or any such order. It is void. It should be noted that while the Government contends in this proceeding that such statutory authority presently exists, the Post Office Department is at the same time contending that it does not in seeking the passage of legislation calculated to permit it. See H.R. 569, 83rd Cong."

(Missing Footnote)

An appeal was taken to the Court of Appeals for the Ninth Circuit which upheld the decision invalidating the final order of the Postmaster General but did not discuss the question of interim impounding. n4 In fact the matter was, as in Meyers, then moot.

(Missing Footnote)

What effect does the legislative history discussed by Judge Hall have on the authority of the Postmaster General as exemplified by these four cases? In Wong Yang Sung v. McGrath, 339 U.S. 33 (1950), the Supreme Court discussed this problem saying:

"On the other hand, we will not draw the inference, urged by petitioner, that an agency admits that it is acting upon a wrong construction by seeking ratification from Congress. Public policy requires that agencies feel free to ask legislation which will terminate or avoid adverse contentions and litigations. We do not feel justified in holding that a request for and failure to get in a single session of Congress clarifying legislation on a genuinely debatable poit of agency procedure admits weakness in the agency's contentions. We draw, therefore, no inference in favor of either construction of the Act -- from the Department's request for legislative clarification, from the Congressional Committees' willingness to consider it, or from Congress' failure to enact it."

This opinion of the Supreme Court seems decisive on the question and appears directly opposed to the interpretation made by Judge Hall. The Respondent attempts to distinguish Wong Yang Sung from this proceeding saying that in that case no legislation was enacted into law while here the legislation granting interim impounding authority for obscenity proceedings was enacted but was not enacted for fraud. I can see no valid basis for such a distinction in the light of Wong Yang Sung. In fact the bill which resulted in what is now 39 U.S.C. 259(b) applied only to obscenity proceedings when introduced. Of considerable significance is the fact that the four decisions of various District Courts cited herein upholding the authority for interim impounding orders in both types of proceedings were rendered between the time of the passage by the House of Representatives of H.R. 5850 in 1952 and the passage of 39 U.S.C. 259(b) in 1956.

The General Counsel has offered substantial evidence to sustain a preliminary finding that there is a fraudulent scheme being operated by the Respondent through the mails. Sufficient evidence having been adduced through the statements in his motion and the statement of the Food and Drug Administration of the Department of Health, Education and Welfare, to indicate that the public interest warrants the issuance of an interim impounding order, the order will issue.

Since this mail will be held pending a final determination on the merits there is no indication of an irreparable injury to the Respondent for if the decision is favorable to him it may then be received. The Department stands ready to expedite the administrative proceedings in any reasonable manner so that a final determination may be reached as early as possible.

1/ Standard v. Olesen, 74 Sup. Ct. 768.

2/ It should be noted that in this proceeding the Department afforded both notice and a hearing.